Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HealthCare Global Enterprises Ltd (NSE:HCG, Financial) reported its highest-ever quarterly revenue of INR559 crores, marking a 19% year-on-year growth.
- The company achieved a 23% growth in PAT and a 15% growth in adjusted EBITDA, indicating strong financial performance.
- The Oncology business, post-MG Hospital Vizag acquisition, grew by 24%, enhancing the company's regional footprint.
- Emerging Centers showed robust performance with a 25% year-on-year growth, with the Kolkata center growing by 40% and the South Mumbai center by 28%.
- The company is focusing on precision oncology and integrating research and academics, positioning itself at the forefront of cancer care innovation.
Negative Points
- The EBITDA margin decreased from 18.5% in Q2 to 16.45% in Q3, primarily due to seasonal factors and reduced operating leverage.
- The South Mumbai center faced challenges in international business due to geopolitical issues, impacting its performance.
- The Milann business continues to face revenue decline, partly due to competition from the original founder's new centers.
- International patient business was affected by geopolitical tensions, particularly with Bangladesh, impacting medical tourism revenue.
- The company anticipates losses from new brownfield centers in Bangalore, which may offset some of the EBITDA margin expansion.
Q & A Highlights
Q: Could you clarify the ownership structure after KKR's acquisition and the role of Dr. Ajai?
A: Dr. Basavalinga Ajaikumar clarified that CVC will be classified as public shareholders, while he remains a promoter. KKR can potentially increase its stake to 77% through an open offer, but the exact percentage will depend on the open offer's outcome. Dr. Ajai will focus on clinical excellence, research, and academics, stepping back from daily operations.
Q: What is the expected margin trajectory for the next year?
A: Ashuthosh Kumar, from Corporate Business Development, explained that margins are expected to expand by 1% to 1.5% in the next financial year, despite potential losses from new centers. The margin improvement will be driven by existing portfolio performance and operational leverage.
Q: How are the Mumbai centers performing, and what is the outlook for their EBITDA?
A: Ashuthosh Kumar stated that the South Mumbai center is expected to reduce losses by INR1 crore and break even by the next financial year. The Emerging Centers, including Mumbai, are growing at 25%, contributing significantly to EBITDA margin expansion.
Q: What impact will the KKR acquisition have on HCG's business plans?
A: Dr. Basavalinga Ajaikumar mentioned that while detailed discussions with KKR are pending, the focus remains on growing existing centers and improving operational and clinical excellence. Long-term plans will be developed in partnership with KKR.
Q: What is the outlook for the International Patient business, particularly in South Mumbai?
A: Meghraj Gore, CEO, noted that international business was impacted by geopolitical issues, particularly with Bangladesh. However, they expect normalization in Q4 and aim to maintain international revenue contribution at 3.5% to 4% going forward.
Q: What is the strategy for the Milann business, given its declining revenue?
A: Dr. Basavalinga Ajaikumar acknowledged past challenges but expressed optimism about a turnaround, focusing on integrating male and female fertility services. They are considering divestment opportunities at the right time.
Q: What are the future growth strategies for HCG?
A: Dr. Basavalinga Ajaikumar emphasized maximizing growth potential in existing centers and exploring mergers and acquisitions, particularly in dedicated oncology centers. The strategy will be refined with input from KKR.
Q: What is the current debt level, and how does HCG plan to manage it?
A: Ruby Ritolia, CFO, stated that the net debt, excluding capital leases, is about INR650 crores. HCG is comfortable with this level and plans to manage it within their growth and capital investment strategies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
